Abet Chichi2

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Boxer: Successful Test of Support, acNov05
By Harry Boxer, The Technical Trader http://www.thetechtrader.com

The market had a very interesting session. We moved up early in the session to resistance but failed and failed miserably. That was followed by a steep drop on the indices that saw the Nasdaq 100 drop from 1435 to 1415, a 20-point drop in less than an hour.

The S&P dropped from about 1055 to 1045, about 10 points, in the same time period. When we got to those levels we reached just above very important support around the 1410-12 zone on the Nasdaq 100, reaching 1414. The S&P 500 hit support right on the nose in the 1044-45 zone by reaching 1045, and then bounced off of that level. Then they went sideways into the lunch hour and early afternoon at which time the market took off on a very strong rally, reaching its highs and new highs for the session on the Nasdaq 100, but failing to do so on the S&P 500 with about 10 minutes to go. Then they pulled back at the close just a tad.

Net on the day, it was a very mixed picture. The Dow was down only 18 and the S&P 500 was down 1.44, but the Nasdaq Composite was up by a very small fraction with the Composite up under 2 points. The SOX Index was up about 1 percent today, and that helped bolster Nasdaq.

Advance-declines were nearly dead-even flat on both exchanges. It was a very unusual day. Up/down volume was dead-even flat on New York but 11 to 8 positive on Nasdaq. Total volume on Nasdaq was about 2 billion, New York was about 1 1/3 billion.

My personal board was very mixed, but there were some outstanding stocks today. In the large-cap sector, QLogic (QLGC) was up 1.39 and Veritas (VRTS) up 1.31. China Yuchai (CYD) was once again very strong relatively today and reached a new 52-week high at 35 before closing at 34 ¾.

Low-priced IBIS Technologies (IBIS) was up nearly a point, and there were a few other lower-priced biotech stocks that performed relatively well. Those included SuperGen (SUPG) up 79 cents and PARS up 40 cents. Millennium (MLNM), Dendreon (DNDN) and deCODE genetics (DCGN) were all up very small fractions but positive on a mixed day today.

Stepping back and reviewing the patterns, important and key short-term support was tested successfully today, and the late rally did take out the three-day declining tops line in the last half-hour or so. So we do have minor breakouts here after a successful test of support.

What remains to be seen is whether the market can follow through to the upside or whether the late rally was nothing more than short covering. So tomorrow may be a key session for the short-term direction of the market.

Good trading!

Harry